60-30-10 The-One-Trading-Rule-That-You've-Probably-Never-Heard-of
60-30-10 The-One-Trading-Rule-That-You've-Probably-Never-Heard-of
60-30-10 The-One-Trading-Rule-That-You've-Probably-Never-Heard-of
Principle
The One Trading Rule (That Youve Probably Never Heard Of) That Can Instantly Transform You Into A More Accurate, Confident and Profitable Forex Trader
By Jason Fielder
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Fellow Trader, What you are about to read is the result of nearly 8 years of full-time, intensive research, testing, and real-live, in-the-trenches trading. Some of the concepts and techniques youre about to learn may seem simple and even common sense at first, but do NOT discount them. This truly has the power to change your entire trading life, as it did mine as soon as I discovered this tipping point little known secret. I say tipping point because for me, once I learned what I am about to share with you right now, it literally took me from a reasonable middle of the road trader, to a full time, highly successful and very consistent FULL TIME trader. I would go as far as saying it changed my life and Im about to share it with you right now, so keep reading. Let me begin by asking you a simple question Do you feel like the system or systems youre currently using have great potential, and that you are so darn close turning that corner, making a TON of money and becoming a truly successful trader? Im willing to bet you do. How do I know? Because thats exactly how I felt for years, as did every other trader I knew back when I was convinced I knew what I was doing (man was I ever wrong!) But dont fret because I have some very good news. This report is going to be your missing link, just as it was for me, when I crossed that tipping point and went from amateur to expert. In a moment I am going to reveal the 60:30:10 Rule and how understanding it can empower you become a far better trader almost immediately. But before we do that, we need to take a closer look at the markets and examine exactly how they move
And this idea of the 3 market conditions is nothing new It was first talked about by French mathematician Louis Jean-Baptiste Alphonse Bachelier (often referred to today as the Einstein of Finance) in his 1900 PhD thesis, the Theory of Speculation in which he said:
Random noise [i.e. counter-trending] is what defines the normal market behavior. There are only two other types of market movement that are outside of the zone of random noise: market spikes [i.e. breakouts] and trends.
So the concept here is this: Most of the time the markets bounce around in a countertrend mode, and occasionally it will move into a trending mode or breakout (i.e. spike) to a new high or a new low. Its just how the financial markets work! And it continues to hold true today in every market, every instrument, and every timeframe! Ok, not so exciting yet, so why does this matter? Because when you are intimately aware of the three market conditions (and which condition the market is currently trading in), it offers you a massive advantage over all other traders. And heres why: Most traders I know only trade one or at most two market conditions: trends and breakouts. Unfortunately for them, trends and breakouts only occur about 40% of the time, which means 60% of the time youre either sitting on the sidelines or you are trading the markets as if they were behaving differently than they actually are, which is the MAJOR reason you are losing on so many trades. It would be exactly like going to work on a construction site with the wrong tools 60% of the time - you arent going to do a very good job, and eventually you would get fired. So trading the way you likely are right now is going to slowly drain all of your resources till you bring your account to ZERO. To put it another way, your current approach is why youre wrong more times than youre right is why youre still nervous when it comes time to pull the trigger is why youre not profiting consistently and are still looking for something to help you get there Now that you have an understanding of the three market conditions, lets examine how they occur and how you can use this powerful yet little known phenomenon to increase your accuracy, confidence, and PROFITS trading the Forex.
This screenshot gives you an example of how the trending days number was calculated. A simple Bollinger Band breakout system was used to determine when a pair was in a trending mode, and the candlesticks were added together to get a total number of trending days for the year. This number was then divided by the total number of trading days (240) to get the trending average.
In this example I counted a total of 80 bars that were in a trending mode, so out of the 240 trading days in 2008, the market was in a trending mode 80 of those days or 33% of the time. I then used the same method to calculate the total number of breakouts for the GBP/USD in 2008
In this screenshot I am tallying the number of breakout days for the GBP/USD in 2008 on the day chart. In this example I used the Price-Action Channel set to 20 to determine breakouts because its a fairly well-known breakout indicator (that was also made famous by the Turtle Traders). Youll find, however, that virtually any indicator you use to determine trends and breakouts will still return a 60: 30:10 ratio.
Using this method, I found that there were a total of 23 breakout days out of a totally of 240 trading days, yielding a breakout average of 9.6% for the GBP/USD in 2008. GBP/USD Trend: 80 days (33.3%) Breakout: 23 days (9.6%) Counter-Trend: 137 days (57.1%) As you can see, were right at the 60: 30: 10 ratio, and the results were strikingly similar across the other 3 major pairs:
EUR/USD Trend: 91 days (37.9%) Breakout: 26 days (10.8%) Counter-Trend: 123 days (51.3%) USD/CHF Trend: 87 days (36.3%) Breakout: 29 days (12.1%) Counter-Trend: 124 days (51.6%) USD/JPY Trend: 70 days (29.2%) Breakout: 26 days (10.8%) Counter-Trend: 144 days (60%) Average of 4 Majors Trend: 34.2% Breakout: 10.8% Counter-Trend: 55% Again, I invite you to do your own testing for different years and different time-frames (even using different indicators). If you do, youll see that the 60: 30:10 Rule will appear time and time again. So now that Ive hopefully proven the existence of the 3 market conditions and the fact that they only trend and breakout (at best) 40% of the time, the question you should be asking yourself is
(i.e. times when we can determine that the market is trading in one of the three market conditions) to stack the deck in our favor. Ill talk more about moments of opportunity and stacking the deck in just a bit, but first lets discuss the first point which is learning to trade in all market conditions
trading system that you can add to your arsenal so you can profit when the market is moving sideways. Whenever I talk to fellow traders about counter-trend trading, I usually hear one of two responses: RESPONSE #1: You cant make money in sideways markets. Youre better off waiting for a new trend to fully develop. RESPONSE #2: Counter-trend trading is risky. You need to trade with the trend. The first response is pure ignorance. The notion that you cant make money when markets are moving sideways is ridiculous. In fact, I do it almost every day. For example If you look closely, youll see that I made right at 93 pips on 6 USD/JPY trades in the Forex just last April. Thats 93 pips net profit (after spreads were taken out) in just over 24 hours!
NOTE: The red arrows show where my system sold short and the green arrows show where my system boughtin. The blue and red lines make up one of my proprietary indicators that tells me exactly when I need to get in and when I need to get out.
93 pipsand thats while everyone else was sitting on the sidelines! And remember, the market is in counter-trend mode 60% of the time, so days like these are actually quite common. Also, if you wait for a new trend to fully develop, chances are youll miss out on all the big profits from the early moves.
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In fact, more times than not youll wind up getting in just in time to watch the trend reverse on you. Let me tell you, Ive been thereits no fun. The second response is the most common objection that I hear, and I think I know the reason why. Open up any beginner trading book and invariably youll see a rule that reads something like this: NEVER trade against current trends. On the surface, this rule seems so obvious that its rarely challenged. But when you do the math and realize that markets only trend 30% of the time, you start to think that maybe all those trading gurus werent telling you the full story. And best of all
Counter-Trend Trading Allows You To Pick the Low-Hanging Fruit While You Wait for the Big Moves To Occur
Actively trading in sideways markets gives you an incredible feel for what the market is doing. You start to understand the markets personalityits quirks. You know what makes it tick. And just like old married couples are able to finish one anothers sentences, by being in the market at all times you can anticipate the end of the markets sentences as well (i.e. new trends and big breakouts). This level of intimacy with the market is something that cant be developed by sitting on the sidelines or looking back through old charts. Thats why its essential that youre IN THE MARKET as often as necessary. Not only does it allow you to skim off the easy profits that would otherwise be left on the table, it also better prepares you for when the really big moves do occur. Now one thing I want to point out right now, is that being in the market as often as necessary and trading during the countertrend market patterns that you likely currently avoid DOES NOT mean you are spending a lot of time trading. There is a big difference between understanding how to grab a significantly larger number of trading opportunities, and overtrading, or being married to your screen if you have the right system and trading plan.
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4:00pm every day. So, while the banks are closed, volume drops off dramatically and the markets tend to move in a ranging (i.e. counter-trend) mode. The retail traders (i.e. you and me) simply dont move enough money to cause large breakouts or new trends. Normally this would be a bad thing, but for traders who know how to trade in counter-trend markets, this is a DAILY golden opportunity. The sweet spot to take advantage of this predictable moment of opportunity is when the U.S. banks close at 4:00pm eastern but before the Asian banks re-open at 7:00pm eastern, but volume really drops off so much in the final hour of trading that you can usually broaden this window to 3:00pm 7:00pm eastern. This means you have a solid 4 hours EVERY TRADING DAY to scalp some pips off the market if you know what I do. And heres one way of doing that:
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The screenshot above shows two examples of Night Owl trading on two different days. In this case Im using the Price Action Channel set to 2 periods on the EUR/USD hour chart, and as you can see I was able to pull 43 pips out of the market one day and 42 pips the next. Heres another example from the USD/JPYalso on the hour chart:
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This example shows three Night Owl trades, three days in a row, and this time I was able to pick up a total of 80 pips over 3-sessions. And remember, this when most traders have called it quits for the day! Now, for the sake of full disclosure, I will tell you that I dont personally trade the Price Action Channels as Ive shown above. While the system above works well, I have developed a proprietary counter-trend strategy that is even more accurate that Ill tell you about at the end of this report. More on that in just a bitfor now, lets look at the 2nd predictable moment of opportunity during counter-trend conditions.
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As you can see not every trade is profitable, but I was still able to net 86 pips while the rest of the world was sitting on the sidelines. Heres another example of trading the Euro Interest Rate Decision:
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This time I was able to pull 136 pips out of the chop, and all 5 trades were winners! In this example Im using my own, proprietary trading system called TRIAD to trade the pre-announcement, and the reason it works so well is because it is specifically designed for counter trend trading right before major news announcements. The whole key to all this is that were using the predictable moment of opportunity which in this case is the news announcement, to stack the deck in our favor for some very profitable counter-trend trades. Ok, now that you have a real-world understanding of how you can trade (and profit) thanks to your understanding of the 60:30:10 Principle, lets talk about your next steps
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How You Can Use This New-Found Knowledge To Become a More Accurate, Confident and Profitable Trader
At this point you have a couple of choices One option is to use your new-found knowledge and go hunting for 3 separate systems that are individually designed to trade in each one of the three specific market conditions that you now know exist (or develop your own if you prefer.) And if you do that, you also know that you would be using your counter-trend system the majority of the time, so you better spend heavily on that one because youll be using it the most. You see, you already know enough (all backed up by hard evidence you can even go prove to yourself right away) to give yourself a big advantage over 99% of traders. You know that 60% of the time you need to be trading very differently than the other 40% of the time and you CAN consistently pull profits out of the market during these very same times most traders are stuck on the sidelines! Of course there are two problems with doing that. First, you would need to learn 3 separate systems (not to mention spend a whack of dough to buy all of them.) And second, it still wouldnt solve the entire equation because you would still need to know WHICH market condition you were in. On top of this, since they would be unrelated systems, they wouldnt have the ability to talk to each other and identify which system should be taking the trades at any given time. So what now? I had the exact same thoughts and concerns when I first made this discovery, so I made it my lifes work to solve this problem. And thats exactly what I did
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But guess what? I did it! Its called Auto-Adaptive Technology and it works very, very well. So well in fact I quit my day job and became a full time trader almost immediately after completing the TRIAD system. I designed TRIAD to be one single system that automatically adapts to the current market conditions, instead of three systems working separately. And it always takes its trades based on the exact set of specialized rules designed for the current market. It is the exact opposite of a one size fits all system as most are, and for that very reason, its almost scary accurate. It has the ability to know when the market conditions are shifting and adapt accordingly. Its all explained in the video I just finished, so go watch now, and get ready for your own tipping point to occur:
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